You can redeem your electronic EE bonds online in your Treasury Direct account, but paper bonds have to be cashed at a financial institution or mailed to the U.S. Treasury. The minimum hold period before you can cash EE bonds is 12 months after the purchase, and you'll need to follow additional Treasury guidelines to redeem them.
Cashing Electronic Bonds
Redeem your electronic EE bonds by logging in to your Treasury Direct account and clicking on the Manage Direct tab. Locate and click "Redeem Securities" under "Manage My Securities." Click the button for EE bonds and submit. You can choose up to 50 EE bonds per transaction. Select the EE bond or bonds you wish to cash, and follow the instructions. Submit your request for payment to your linked bank account.
Cashing Paper Bonds
Many banks redeem paper EE bonds, but not all do. If your financial institution cashes the bonds, the Treasury Direct website suggests you ask whether they limit the dollar amount and what identification you'll need. The necessary identification, such as a valid driver's license, may depend on whether or not you're a regular customer.
You can also mail paper bonds to the Treasury for cashing. First go to a bank where you're a customer and ask a bank officer to certify your signature on the reverse side of your bonds. Then mail them to the Treasury Retail Securities Site, PO Box 214, Minneapolis, MN 55480-0214.
Other Rules on Redemption
You normally must be an owner or co-owner to cash EE bonds. If not, you must present proof of your legal right to cash the bonds, such as a power of attorney. You must redeem at least $25 worth of electronic bonds. Above $25, you can redeem any amount in increments of 1 cent. You must leave at least $25 in your online account if you wish to make a partial redemption.
The Treasury doesn't limit the amount of paper EE bonds you can cash, but some banks do.
Timing Your Redemption
For EE bonds dated May 1, 1997 or later, interest is added every month. If you cash your EE bonds after one year but before five years -- for example, to pay medical bills or put a down payment on a home -- you'll lose three months of interest.
Bonds dated May 1, 2005 or later are guaranteed to double in value at the original maturity date of 20 years from issue. If they haven't doubled, the Treasury will give them a one-time increase in value. They'll earn a fixed rate for the next 10 years, up to the final maturity date, which is 30 years from purchase for bonds purchased December 1965 or after.
You'll earn maximum interest by keeping EE bonds until maturity.
Most people pay income taxes on EE bond interest whenever they cash in the bonds. If you're still holding bonds at the final maturity date, you must report the interest on your income taxes in the year of final maturity even if you don't cash them.
The government recommends cashing mature bonds, although there's no requirement. If you forget about them and don't report the interest, you could eventually have problems with the Internal Revenue Service, such as having to pay a penalty.
You can also use your money or invest it again If you cash in your bonds at maturity. The Treasury maintains a website of securities that have stopped earning interest.